Best of Luck,
We are in the process of reevaluating - the bank has ordered an appraisal which I was surprised they would do so close to the last BPO. We have our fingers crossed that it will come in close enough to our number that we will be able to get the deal done.
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The original list price set by the listing agent has no factor in that decision, really. If your offer price is lower than what you and your agent determined as the real value, then expect them to counter you during their approval process.
You also might want to understand that California law does not allow a lender to foreclose on the home in the middle of the process, like other states. Not that it couldn't happen by mistake so make sure that you're tracking any sale date, if they are in foreclosure.
In summary, if the lender's appraisal is higher, they will counter you, not reject you. It will be your choice as to whether you accept their higher price, you give evidence to counter to a different price, or walk away.
If the price you offered was a fair offer, meaning you did a real analysis of area values and structured your offer to be properly aligned, you should be in a good position.
Too often buyers believe that because the owner is in a difficult situation they can come in with a opportunistic offer. There is nothing wrong with a low ball offer as long as you are aware of the short sale process. The bank will not reject your offer but will come back with their own purchase counter.
If the home was listed below market value, the bank will in essence RAISE THE PRICE. Yes, it can be raised even above the listed price. "Surprise!"
If your offer was a low ball, the bank can counter, accept your offer or go for what's behind curtain number 3.
Unfortunately, we don't know what is behind curtain number 3. Here in Florida it could be the potential to roll this home into a bulk purchase deal with Blackstone Investment or any of the other 5 Goliath national investors, after all, Blackstone is on a billion dollar buying spree to acquire rentable real estate.
Based on how you arrived at your purchase offer, you may need to be prepared for the eventual negotiations based on the selling banks appraising process. If you KNOW you are below market and was trolling for a 'real deal' there is a real likelihood you will either raise your offer or be counted among the 70% of short sale offers that fail.
Short sales are the 'Wild, Wild, West of Real Estate," where there exists an illusion of rules but anything can and does happen. Buckle up, it can be a wild ride.
Congrats on getting into contract! But this is just the first stage. Now that your offer has been accepted by the seller, listing agent would be submitting it to the short sale lender along with the complete short sale package.
Short sale lender will due their due diligence ...get an appraisal and a BPO done and decide if they want to accept your offer the way it is, reject it or counter it...
You would have the same choices once you get short sale lender's counter...accept it, reject it or counter..
Once you and the short sale lender have come to terms on the purchase price..your transaction moves forward to the point where your loan agent will order the appraisal. I
If the appraisal come higher...you now got instant equity in the house and you don't have to do anything... be happy!! they can't tell you to increase the purchase price :-)
But if the appraisal comes in lower than the purchase price and I hope you have appraisal contingency in place... you can negotiate with the short sale lender to reduce the price, pick up the difference yourself or cancel the contract ...get your deposit out.
Hope this help!
These are merely probable. Anything exceptional could happen. See Annette's post: " there exists an illusion of rules but anything can and does happen"